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Many of us are paying attention to the debate over the new Farm Bill and looking at changes to existing programs and potential new programs. One issue which may come up after passing a new Farm Bill is how quickly USDA must implement program changes or new programs. In Ausmus v. Perdue, a group of Colorado wheat farmers recently won their case after selecting a new crop insurance product before USDA’s Risk Management Agency (RMA) had implemented the product for wheat. The court ruled that although it might conflict with other duties under federal law, RMA had to allow producers to use the program after the effective date of the 2014 Farm Bill, and not when RMA implemented the regulations.
In 2015, Colorado wheat farmers provided their crop insurance agents with written requests electing to exclude all eligible crop years in calculating their actual production histories (APH). The crop insurance agents reached out to RMA seeking guidance on how to proceed with this request. RMA responded with guidance saying RMA authorized APH Yield Exclusion for the 2015 crop year for most crops, but not winter wheat. Based on this guidance, the crop insurance agents denied the requests for APH Yield Exclusion on winter wheat in 2015.
The Colorado wheat farmers filed an appeal with the National Appeals Division (NAD). On appeal, the NAD hearing officer determined that NAD did not have jurisdiction (aka, the ability) to hear the appeal. The wheat farmers requested a review by the NAD Director. The NAD Director reversed the hearing officer, finding NAD did have jurisdiction but also found that RMA had discretion on the appropriate time to implement Yield Exclusion for winter wheat. The farmers appealed this decision.
APH Yield Exclusion
Before we discuss the court’s ruling, let's review what APH Yield Exclusion is. APH Yield Exclusion allows producers to exclude specific yields from eligible years from their actual production histories (APH). This exclusion can have an impact on producers’ APHs and crop insurance premiums. To learn more about APH Yield Exclusion, see (http://go.umd.edu/YEAPH).
The federal district had only one issue before it: was APH Yield Exclusion to be immediately available to farmers upon passage of the 2014 Farm Bill or did RMA have the discretion to determine the timing of implementing APH Yield Exclusion?
To answer this question, the court looked to determine if Congress was silent or ambiguous on this issue in the Farm Bill. RMA agreed that Congress spoke directly on APH Yield Exclusion being immediately available upon passage (February 7, 2014), but argued that the statute was ambiguous on the implementation date of APH Yield Exclusion.
The court reviewing the APH Yield Exclusion text found that Congress had been silent on an implementation date and that this lack of an implementation date favored farmers, not RMA. With other laws impacting the crop insurance program, Congress had a history of providing RMA with an implementation date. The court found that Congress’ silence in the case of APH Yield Exclusion meant Congress wanted the provision immediately available.
Another argument RMA raised was the Federal Crop Insurance Act requires RMA to establish underwriting rules for new products, use sufficient actuarial data before offering new crop insurance coverage, and operate crop insurance products in an actuarially sound manner. The court was not swayed by this argument and found the court had to apply the statute as written even if it created substantial logistic issues for RMA.
We are seeing a debate on a new Farm Bill currently going on in Congress. This new bill will create new programs USDA will need to implement. The decision highlights the fact that many of those new programs may become available on the effective date of the new Farm Bill. Based on this decision, USDA may not have the choice to implement these new programs before finalizing requirements under existing federal laws.
A similar case involving wheat farmers in the Texas Panhandle had a similar decision. In that case, the Texas farmers elected APH Yield Exclusion but were told it was currently unavailable. The federal district court also ruled that the program became available upon the 2014 Farm Bill becoming law. The Texas case is currently on appeal before the 5th Circuit Court of Appeals (Adkins v. Vilsack)
Adkins v. Vilsack, 252 F.Supp.3d 588 (N.D. Tex. 2017).
Ausmus v. Perdue, 289 F.Supp.3d 1227 (D. Colo. 2018).